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3 Momentum Stocks And ETFs To Play

After over a month-long storm, the global market has finally taken a breather. Heavy sell-offs triggered by the Chinese market slowdown, global growth issues and a steep plunge in oil prices now appear overdone. The factors – mainly oil and China – for which the market went into a tailspin, brought the recent relief. The Chinese central bank let the value of the yuan rise sharply against the U.S. dollar on Monday, when the biggest one-day jump in the currency was seen in almost a decade. The move finally prevented long-standing high-level talks about a meaningful deceleration in yuan. On the other hand, developments were positive in the oil patch, with prices soaring as the market mulled over the possibilities of a deal to limit supplies later in the year. Also, stimulus hopes in Japan and Europe to boost waning economies charged up the market. Back home, retail sales for January came in at the stronger side. Retail sales gained 0.2% in January – higher than the consensus estimate of a 0.1% increase. All these developments have brought back the risk-on trade sentiments – which were long missing – in the market. Among the top U.S. ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) add 1.7%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) advance 1.4% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) move higher by about 2.3% on February 16. Not only the U.S. market, the all world ETF iShares MSCI ACWI Index (NASDAQ: ACWI ) was up 2%, the iShares Asia 50 ETF (NYSEARCA: AIA ) jumped 2.8%, the China ETF iShares China Large-Cap (NYSEARCA: FXI ) advanced 4.2%, the Vanguard FTSE Europe ETF (NYSEARCA: VGK ) moved higher by 1.7% and the iShares MSCI Japan ETF (NYSEARCA: EWJ ) climbed 3.7%. While we do not believe these bounces have legs, investors’ sentiments about risky investments became relatively relaxed lately especially because of compelling valuation. Thus, momentum investing might be an intriguing idea for those seeking higher returns in a short spell. Momentum investing looks to reflect profits from buying stocks which are sizzling on the market. Below, we highlight three momentum stocks and three ETFs that may find a place in investors’ wish list. Stock Picks For stocks, we have chosen top picks using the Zacks Screener that fits our criteria of a momentum score of “A”, stock Zacks Rank #1 (Strong Buy) and positive estimate revisions for the current quarter. Here are the three recommended stocks. Delta Apparel Inc. (NYSEMKT: DLA ) Based in South Carolina, this retailer of apparel has delivered an average positive earnings surprise of 36.36% over the trailing four quarters. The consensus estimate for the current quarter has risen from $0.07 to $0.33 per share in the last 30 days, as one analyst raised the forecast, while none cut the estimate. Along with a Momentum score of “A”, the stock also has a Value score of “A”. This Zacks Rank #1 stock is up 13.8% so far this year (as of February 16, 2016). OraSure Technologies Inc. (NASDAQ: OSUR ) The company makes and markets oral fluid diagnostic products and specimen collection devices in the United States, Europe and internationally. OSUR is down 1.1% so far this year. The stock currently has a solid Zacks Industry Rank in the top 18%. It also has a Growth score of ‘A”. The consensus estimate for the current quarter has risen from breakeven to $0.01 per share. It has delivered an average positive earnings surprise of 216.7% over the trailing four quarters Tyson Foods Inc. (NYSE: TSN ) Based in Arkansas, Tyson Foods, together with its subsidiaries, operates as a food company worldwide. The stock currently has a Growth score of “A”, a Value score of “B” and a solid Zacks Industry Rank in the top 1%. In the last 30 days, its projection of earnings increased from $0.86 to $0.93. While one analyst raised the estimate, another cut it in the last 30-day frame. This high-momentum stock is up 16% so far this year (as of February 16, 2016). ETF Picks iShares MSCI International Developed Momentum Factor ETF (NYSEARCA: IMTM ) The $11-12 million fund looks to track the performance of large- and mid-capitalization developed international stocks exhibiting relatively higher momentum characteristics. The product charges 30 bps in fees and yields 1.73% annually. No stock accounts for more than 2.41% of the basket. The fund has a diversified double-digit exposure in the Consumer Staples, Discretionary, Financials, Industrials and Healthcare sectors. The product is heavy on Japan (32.23%), while Germany and U.K. also have solid exposure of 11.33% and 10.07%, respectively. IMTM is down 6.8% so far this year, but added 3.4% on February 16, 2016. The fund has a Zacks ETF Rank #3 (Hold). iShares S&P 500 Momentum Portfolio ETF (NYSEARCA: SPMO ) The $2.4-million fund tracks the performance of stocks in the S&P 500 Index that have a high momentum score. The fund charges 25 bps in fees and is heavy on Consumer Discretionary (31.9%) and Healthcare (27.5%). Consumer Staples and IT also have double-digit exposure. SPMO is down 7% year to date, but added over 2.2% on February 16, 2016. Cambria Global Momentum ETF (NYSEARCA: GMOM ) This active ETF seeks to preserve and grow capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, independent of market direction. The bond fund iShares 3-7 Year Treasury Bond ETF (NYSEARCA: IEI ) holds the top position with 11.73%, followed by other U.S. Treasury funds, namely the Vanguard Short-Term Bond ETF (NYSEARCA: BSV ) and the iShares 1-3 Year Treasury Bond ETF (NYSEARCA: SHY ) in the next two spots. The fund charges 94 bps in fees and yields 1.91% annually. Equity ETFs also get a place in the fund. The fund has lost just 1.7% so far this year, while it added 0.2% on February 16, 2016. This could be a great pick in the bear market as well. Original Post

What Negative Interest Rates Tell You About The Risk-Reward Backdrop

When a country’s central bank reduces its interests rates below zero (i.e., “goes negative”), the action should boost the relative appeal of stock assets. That is the theory. Unfortunately, recent policy initiatives by the European Central Bank (ECB ) and the Bank of Japan (BOJ) have failed to inspire their respective stock markets. The ECB first began fooling around with negative interest rate policy in June of 2014 by lowering its overnight deposit rate to -0.1.% It went to -0.2% in September of 2014; it went even lower (-0.3%) by December of 2015. Did these rate manipulating endeavors benefit European equities or hurt them? The EuroStoxx 600 Index moved lower shortly after each of the interventions and it currently trades at a lower value since the inception of negative rates. Meanwhile, the Bank of Japan (BOJ) became the second major player to announce plans to charge financial institutions (-0.1%) for the privilege of depositing money. Since the announcement on January 29, 2016, the Nikkei 225 has shed 7.5% of its value. The price depreciation even includes a monster 7% snap-back rally – a price surge that came on speculation that the BOJ will enact more “stimulus” due to persistent recessionary pressures. Naturally, front-loading an enormous rally in stock and real estate prices to create a wealth effect is not the sole aim of a country’s central bank. Academic policy leaders believe that sub-zero rate policy strengthens a region’s or nation’s export competitiveness by weakening a corresponding currency. Take a peek at the falling euro via the CurrencyShares Euro Trust ETF (NYSEARCA: FXE ) since June of 2014. On the flip side, European exporters haven’t exactly been lighting the world on fire since its currency cratered. Trade volumes have been largely flat. Whatever exporting advantage might have been reaped from a a weaker euro-dollar was nullified by anemic demand around the globe. It seems there is more to winning the global trade game than engaging in currency wars. And there’s more. Sometimes, a country’s best laid plans go awry. The yen via the CurrencyShares Japanese Yen Trust ETF (NYSEARCA: FXY ) has actually gained 5.5%-plus since the BOJ lowered its target rate to -0.1%. The hope that additional depreciation in the yen would boost export competitiveness – absent more successful efforts to depreciate the currency – may backfire. If negative interest rates are unable to create a wealth effect and have an uncertain track record with respect to boosting export competitiveness, why do it at all? Hope. Zero percent rate policy coupled with quantitative easing (QE) in the United States succeeded at creating a wealth effect and depreciating the U.S. dollar up until the Federal Reserve began tapering QE stimulus in 2014. The hope around the world had been that the Fed’s gradual stimulus removal in the U.S. since 2014 would allow zero percent rates to work better in Europe and Japan. It didn’t. And with few other tools at the disposal of foreign central banks, “going negative” became the illogical conclusion. Is it possible that negative rates in Europe and/or Japan will eventually work? Either to boost respective economies abroad or foreign asset prices for stateside investors? Anything’s possible. However, it has been more beneficial to sell into international equity strength. Consider the iShares MSCI All-World Ex U.S. Index ETF (NASDAQ: ACWI ). Buying the dips of the previous bear market rallies proved damaging. Of course, the central bank of the United States has not resorted to negative interest rates… yet. On the contrary. The Federal Reserve has gradually removed stimulus over the last few years. It ended its final rate manipulating bond purchase (QE) in December of 2014; it raised overnight lending rates 0.25% in December of 2015. Whereas the ECB in Europe and the BOJ in Japan may not be able to revive risk appetite through monetary policy alone, the U.S Fed can. Interest rate gamesmanship fostered the 10/02-10/07 stock bull; it front-loaded the stock rally for the 3/09-5/15 bull market. Nevertheless, until the Federal Reserve reverses course by opting for zero percent rates with a 4th round of quantitative easing, bear market rallies will continue to deceive those who hide their heads in the sand. If you are already prepared for the S&P 500 to fall 20%, 25% or 30% from its May high – if the S&P 500 SPDR Trust (NYSEARCA: SPY ) falling to 170, 160 or 150 does not faze you – then you would not need to make changes to your portfolio. On the flip side, investors who recognize that the risk-reward backdrop for U.S. equities remains unseasonable may wish to reduce their overall U.S. stock exposure. Selling into a bear market rally can help one raise the cash desired to weather the series of tornadoes yet to come; it also gives one the confidence to increase stock exposure at more attractive prices. Consider a cash level of 25% to 35%. For Gary’s latest podcast, click here . Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.

4 Best-Rated Utility Mutual Funds For Stable Returns

Investors with a conservative mindset looking for stable current income would do well to consider utility funds. They are used as defensive instruments, which protect investments during a market downturn. This is because the demand for essential services such as those provided by utilities remains unchanged even during difficult times. In recent years, many funds in this category have increased their exposure to emerging markets and unregulated companies. Though this strategy has increased the risk involved, it has also generated higher returns. Below, we will share with you 4 top-rated utility mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) as we expect these mutual funds to outperform their peers in the future. AllianzGI Global Water Fund A (MUTF: AWTAX ) seeks long-term capital growth. AWTAX invests a major portion of its assets in common stocks of companies that are represented in the S&P Global Water Index, the NASDAQ OMX US Water or Global Water Indices or the S-Network Global Water Index, or are involved in water-related activities. AllianzGI Global Water A is a non-diversified fund and has a three-year annualized return of 3.6%. Andreas Fruschki is the fund manager since 2008. Kinetics Alternative Income Fund C (MUTF: KWICX ) invests a large portion of its assets in the Alternative Income Portfolio, a series of Kinetics Portfolios Trust that holds a portfolio of primarily fixed-income securities. KWICX seeks to provide current income. Kinetics Alternative Income Fund C is a non-diversified fund and has a three-year annualized return of 1.3%. As of September 2015, KWICX held 327 issues, with 11.58% of its total assets invested in the iShares 1-3 Year Credit Bond. American Century Utilities Fund Inv (MUTF: BULIX ) seeks current income and capital appreciation. BULIX invests a major portion of its assets in equities related to the utility industry. BULIX’s portfolio is based on qualitative and quantitative management techniques. In the quantitative process, stocks are ranked on their growth and valuation features. American Century Utilities Fund is a non-diversified fund and has a three-year annualized return of 9.9%. BULIX has an expense ratio of 0.67% as compared to the category average of 1.25%. Putnam Global Telecommunication Fund B (MUTF: PGBBX ) invests a large portion of its assets in both mid and large capitalization companies across the world. PGBBX generally invests in securities of companies that are part of the telecommunication industry. Putnam Global Telecommunication B is a non-diversified fund and has a three-year annualized return of 6.5%. Vivek Gandhi is the fund manager since 2008. Original post